Exemptions in Capital Gain – Table Summary View

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Exemptions available in Computation of Capital Gain in a Table Summary View under Sections 54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA, 54GB

Exemption of Capital Gains
Exemption of Capital Gains
SectionsAssessee to whom AllowedConditions to be satisfiedQuantum of Exemption
Section 54Individua / HIJF1. Transfer should be of a residential house income of which is chargeable under the head income from house property.

2. It must be a Long-term capital asset.

3. Purchase of one residential house in India should be within one year before or 2 years after, or construction should be within 3 years after the date of transfer.

However, where the amount of the capital gain does not exceed 2 crore. the assessee, may at his option, purchase or construction of residential houses in India.

Further, where during any assessment year. the assessee has exercised the option of two houses referred above, he shall not be subsequently entitled to exercise the option for the same or any other assessment year.

Therefore, now the exemption can be claimed for purchase /construction of two residential houses instead of one. This benefit is available only when the capital gain does not exceed 2 crore. Further, this benefit is available only once in a life time.
Actual amount invested in new asset or the capital gain whichever is less.
Section 54BIndividual / HUF1. Transfer (excluding compulsory acquisition) should be of agricultural land.

2. It must have been used in the 2 years immediately preceding the date of transfer for agricultural purposes either by the assessee or his parent or by the HUF.

3. Another agricultural land should be purchased within 2 years after the date of transfer.
Actual amount invested in new asset or the capital gain

whichever is less.
Section 54DAny Assessee which is an industrial
undertaking
1. Transfer must be compulsory acquisition

2. The property compulsorily acquired should be land and building forming part of an industrial undertaking.

3. The asset must have been used in the 2 years immediately preceding the date of transfer of the assessee for the purpose of the business of the undertaking.

4. Within a period of 3 years after the date of compulsory acquisition any other land or building should be purchased or constructed for the use of existing or newly set up industrial undertaking.
— do —
Section 54ECAny Assessee1. The asset transferred should be a long-term capital asset being land or building or both

2. Within a period of 6 months after the date of transfer, the capital gain must he invested in the specified assets i.e. bonds redeemable after years issued by NHAI, RLCL & Power Finance Corporation (PFC)
Actual amount invested subject to maximum of Rs. 50 lakhs in specified asset or the capital gain

whichever is less.
Section 54EEAny Assessee1. The asset transferred should be a long-term Capital asset

2. Such asset is transferred on or after 1.4.2016

3. Within a period of 6 months after the date of transfer, the capital gain must he invested in the long-term specified assets
Actual amount invested
subject to maximum of Rs. 50 lakhs in specified asset or the capital gain

whichever is less.
Section 54FIndividual / HUF1. The asset transferred should be a long-term capital asset, not being a residential house.

2. Within a period of 1 year before or 2 years after the date of transfer, a one residential house in India should be purchased or constructed within a period of 3 years after the date of transfer.

3. The assessee should not own more than one residential house on the date of transfer.

4. The assessee should not within a period of 2 years purchase or should not within a period of 3 years construct any residential house other than the new asset.
If the cost of the new residential house is not less than the net consideration then the whole of the capital gain.

Otherwise,

LTCG  X [ Amt. invested /  Net Consideration Price ]
Section 54GAny Assessee being an
industrial
undertaking
1. Machinery, plant, building, or land used for the business of an industrial undertaking situated in an urban area should have been transferred.

2. Transfer should be due to shifting to any area other than an urban area.

3. Within a period of 1 year before or 3 years after the date of transfer purchased machinery, plant or acquired building or land or constructed building and completed shifting to the new area.
If the cost of the new assets and expenses incurred for shifting are greater than the capital gain, the whole of such capital gain. Other-wise capital gain to the extent of the cost of the new asset.
Section 54GAAny Assessee being an
industrial
undertaking
1. Machinery, plant, building, or land used for the business of an industrial undertaking situated in an urban area should have been transferred.

2. Transfer should be due to shifting to any Special Economic Zone whether developed in any urban area or any other area.

3. Within a period of 1 year before or 3 years after the date of transfer purchased machinery, plant or acquired building or land or constructed building and completed shifting to the new area.
If the cost of the new assets and expenses incurred for shifting are greater than the capital gain, the whole of such capital gain. Otherwise capital gain to the extent of the cost of the new asset.
Section 54GBIndividual/HUF1. There should be a long-term gain from the transfer of a residential property (i.e. a house or plot of land).

2. Such long-term capital gain should arise to an individual or HUF,

3. The amount of net consideration should be utilized by the individual or HUF before the due date of furnishing of return of income under section 139(1), for subscription in equity shares of a eligible company (hereinafter referred to as company). If the full amount of net consideration is not utilized for subscription in equity shares, the exemption shall be allowed proportionate to the amount so invested.

4. The amount of subscription as share capital is to be utilized by the company for the purchase of new asset (eligible plant and machinery) within a period of one war from the date of subscription in the equity shares.

5. The equity shares of the company or the new asset acquired by the company should not be sold or otherwise transferred by the individual/HUF or the company as the case may be within a period of 5 years (in case of eligible startups, 3 years for computer or computer software) from the date of their acquisition.

6. The exemption will be available in case of any transfer of residential property made on or before 31.3.2021
If the cost of the new equity shares of eligible company is not less than the net consideration then the whole of the capital gain.

Otherwise,

LTCG  X [ Amt. invested /  Net Consideration Price ]

Capital Gain Scheme—

If the new asset is not acquired under Sections 54, 54B, 54D, 54F, 54G and 54GA or the full amount could not be invested upto the due date of furnishing the return of income, the assessee can deposit the desired amount under the Capital Gain Scheme on or before the due date of return and thus can acquire the asset within the stipulated time out of money withdrawn from such scheme at a later date. In the case of section S4EC the Capital Gain Scheme is not applicable.

Consequences If the New Asset acquired is Transferred within 3 years of its Acquisition :

Under Sections 54, 54B, 54D, 54G and 54GA —

For computation of new Capital (jam (which can be short-term or long-term), the cost of acquisition of such new asset shall be reduced by the amount of Capital Gain exempt under sections 54, 54B, 54D, 54G and 54GA earlier.

Under Section 54F.—

Besides the new Capital Gain (which can be short-term or long-term), the Capital Gain exempt earlier under section 54F. shall be long-term capital gain of the previous year in which new asset is transferred.

Under Section 54EC.—

If such security acquired is converted into money or any loan is taken against such securities within 5 years, the Capital Gain exempt under sections 54EC for such securities earlier shall be Long-term Capital Gain of the previous year in which such conversion takes place or the loan is taken.

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